Farm debt issue may be key in regional Qld

A battle between Richmond mayor John Wharton and his bank is shaping up as the decisive election issue in the marginal Labor seat of Mount Isa in north-western Queensland.

Mr Wharton’s properties were recently placed in receivership by Bankwest after he was late making interest repayments. Farmers said there was a growing debt problem across the state’s agricultural sector.

Mr Wharton has alleged that the bank mistreated him. He wants to set up a syndicate of beef producers that would pool up to $350 million in assets, giving the farmers greater power in negotiating lending from banks.

“Queensland has a big problem with debt, especially for anyone in the beef industry who expanded in the last seven years," Mr Wharton said.

“We are trying to educate pastoralists on their rights when negotiating with banks."

The Labor member for the seat, Betty Kiernan, welcomed Mr Wharton’s new forum but said it is dangerous for government to get in the way.

“John Wharton and I have had many conversations and I am saddened by the situation he is [in]," Ms Kiernan said. “However it’s not for government to take control of the situation."

Robbie Katter, the son of Australian Party founder
Bob Katter
, is challenging Ms Kiernan for the seat. He is campaigning on the issue of farmers’ debt. “I think there is a misconception in cities that the graziers are doing well," Mr Katter said.

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“But my experience is that a lot of them are doing it tough – and I really think this should be an election issue – it’s not a beat-up at all.

“We have specifically identified this as something we want to target in the electorate."

According to the latest Queensland rural debt survey, borrowings by agribusinesses in the state have reached $15 billion. In the beef sector, debt grew by 36 per cent to $8.24 billion between 2008 and 2010.

What makes the problem more difficult is that 17 per cent of the debt is B+ rated or lower – a low rating that suggests it is highly risky.

At Longreach in central Queensland, rural financial counsellor John Swain said he was getting a sense that more banks were starting to move on farmers. “There are a few where the debt levels have been allowed to get too high, particularly with additional property acquisitions and that has not so much panicked financiers but made them very cautious," Mr Swain said.

Receivers such as Justin Walsh from Ernst & Young are now conducting an increasing number of investigative accounting reviews – a precursor to banks deciding whether they will remove owners of businesses that owe money.

“I certainly don’t believe that farming in Queensland is unsustainable," Mr Walsh said. “It is just not sustainable at the prices that were being paid at the height of the boom."

LNP senator for Queensland
Barnaby Joyce
has called on all politicians to face up to the situation in the state’s agricultural sector.

“If there is a serious situation out there, then it’s up to government to understand why it’s happening and to work as a form of arbiter so that these matters can be resolved," Senator Joyce said.